Nerrod Company Sells Its Products at $500 Per Unit, Net

question 71

Multiple Choice

Nerrod Company sells its products at $500 per unit, net 30. The firm's gross margin ratio is 40 percent. The firm has estimated the following operating costs:What is Nerrod's total sales-sustaining cost applicable to XBT as a customer?

• A)$0.
• B)$920.
• C)$4,120.
• D)$6,300.
• E)$6,420.

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Definitions:

CCA Class

Capital Cost Allowance Class; categories used in Canadian tax law to determine the depreciation rate for tax purposes on tangible and intangible assets.

Depreciation Expense

An accounting method that allocates the cost of a tangible asset over its useful life to account for the decline in its value over time.

Fixed Assets

Durable physical assets owned and utilized by a company in its operations for the purpose of producing revenue.

Erosion

The gradual reduction or depletion of an asset's value, often due to competitive market forces or the introduction of new products.